Will Arbitration Cap for Cops, Firefighters Be Extended in Lame Duck?

John Reitmeyer | November 20, 2017 | Politics
Some lawmakers, advocates say the cap helps hold down property taxes, a potent argument with GOP tax reform poised to eliminate valuable deductions

Cop on motorbike
For the past six years, salary raises for local police officers and firefighters have, in some instances, been kept to 2 percent, for the most part, due to a state law that is set to expire December 31. With New Jersey’s high property-tax bills once again front of mind, municipal officials hope that should be enough incentive to extend the cap during the last lame-duck legislative session of Gov. Chris Christie’s tenure.

Local government leaders cite the law, which places a hard, 2 percent cap on the raises that police officers and professional firefighters can receive in binding arbitration, as a key factor in keeping property taxes in line. Appointees of the Christie administration say the law has saved the state more than $500 million in property taxes, and note that New Jersey police and firefighters are still among the highest paid in the nation.

The local officials maintain the policy has influenced salary negotiations with union leaders. But public-sector unions widely oppose an extension of the cap, and up until now, Democratic legislative leaders have successfully resisted pressure to renew it before a December 31, 2017 expiration date.

It’s unclear whether that will change this year, as the Democratic-controlled Legislature has previously cited the need for a nonpartisan study to determine if the law is a factor in property-tax hikes. A task force created to produce one is in open dispute about whether further study is needed. Republicans tried to make the cap’s looming expiration a big issue in this year’s elections, only to end up losing the governor’s race, as well as a handful of seats in the Legislature.

The federal influence

Still, that could all change thanks to ongoing Republican efforts in Washington, D.C., to pass sweeping changes to the federal tax code. Up for consideration right now are proposals to scale back or even repeal a key federal write-off for property-tax bills, something that saves many New Jersey taxpayers thousands of dollars annually. The loss of that write-off could put new heat on lawmakers in Trenton to do everything they can to control property-tax hikes through policies like the expiring arbitration cap.

Police officers and professional firefighters are, by law, not allowed to strike in New Jersey when they cannot reach new contract agreements with their local-government employers. Instead, their unions and the government officials are offered the option of entering into binding-interest arbitration when they reach a point of impasse, leaving the size of an annual salary increases up to an arbitrator.

But since the cap went into effect in 2011, the state law has prevented arbitrators from awarding any annual increases that are worth more than 2 percent. The limit, championed as a property-tax reform by Christie, was enacted along with a broader, 2 percent cap on overall property-tax hikes, but only the limit on arbitration awards is set to expire at the end of the year.

Up for renewal

The interest-arbitration cap has been renewed once before, in 2014, and under the terms of that renewal, a task-force report on the effectiveness of the cap is also due, by law, to be released to the governor and lawmakers by the members they appointed by December 31, 2017. But earlier this year, in the heat of the election season, disagreements among Christie’s task force appointees and those seated by legislative leaders were aired publicly as the Christie appointees chose to release a draft of the task-force report in late September — without an endorsement from the legislative appointees.

The one-sided report estimated the arbitration cap has saved New Jersey property owners a combined $530 million by curbing salary growth among police officers and paid firefighters. Those projected savings for property owners also came even as New Jersey’s police officers and sheriff’s officers have been earning the second-highest mean wages in the country — $87,490 — for their occupation, and as the state’s paid firefighters have been earning the highest mean wages in the country for their occupation — $81,730.

Union officials responded by arguing the report’s numbers don’t tell the whole story, especially since the officers and firefighters have been forced since 2011 to pay more toward their pensions and health benefits under other reforms spearheaded by Christie.

Eddie Donnelly, the president of New Jersey Firefighters Mutual Benevolent Association, said on Friday that he and the other legislative appointees are ready to get back to work on a more complete final report, but thus far have been rebuffed by Christie’s appointees on the task force.

“They have ignored our request to reconvene,” Donnelly said. “We believe that there is much more information needed to come up with a complete and final report.”

Permanent extension

But state Assemblyman Declan O’Scanlon, one of the Christie appointees, said all of the relevant data has already been released based on how the panel has compiled earlier public reports. O’Scanlon (R-Monmouth) is calling for the cap this year to be extended on a permanent basis.

“It is not honest to say we need to meet again, and that we need to expand the report,” O’Scanlon said. “That is all political bluster.”

For his part, Murphy has for months echoed the position of Democratic legislative leaders, which is that the effectiveness of the cap can’t be fairly evaluated until all relevant figures are released and reviewed. And even though Murphy last week delivered the keynote address during the New Jersey State League of Municipalities annual conference in Atlantic City, he didn’t say anything about an issue the organization has labeled its top priority heading into 2018.

“That’s our number one, number two and number three state issue,” said Michael Cerra, the league’s assistant executive director.

Earlier on during the conference, the local leaders held a lengthy seminar on the cap issue, going deep into the details to show how it has impacted police and fire contracts all over the state since it was enacted in 2011. But labor attorney James Mets also suggested to a room full of local officials during the discussion that the issue goes beyond just the numbers, saying it’s also had an impact on department morale.

“As far as unionized employees, police and fire are the only ones who are told, ‘You can only make so much if you go to interest arbitration.’ It’s an unfair cap,” Mets said.

Yet as the tax-policy discussions continue in Washington, D.C., Democrats in Trenton have to consider how proposed changes that include the loss of the federal property-tax write off could impact the agenda for lame duck and beyond. They ultimately could decide to give the Republican Christie, who supports extending the cap, the final decision to save Murphy from having to make a tough call right after he takes office in January.

No matter how things play out, Burlington Township Mayor Brian Carlin, who served as moderator for the cap discussion that was held in Atlantic City, was optimistic about the arbitration issue getting a more clear-eyed review in Trenton now that the heat of this year’s campaign season has passed.

“People sit down and they actually have to govern, instead of win votes,” Carlin said. “Always, when you’re away from the election cycle, cooler heads prevail.”